Economists: Employees’ EPF Contribution Rate Should Be Maintained At 11% Moving Forward
Author Avatar
(Image: Bernama)

Several economists have stressed that the Employees Provident Fund (EPF) contribution rate for members – which was recently restored back to 11% – must not be lowered again. This is to ensure that they will be able to secure their retirement and cope with increasing expenses in the future, such as rising medical costs.

Specifically, associate professor from Universiti Putra Malaysia, Rusmawati Said stressed that employees must tap into the restored 11% contribution rate to boost their savings. If they are unable to do so, their retirement may be at risk. “Contributors would be ‘burdened’ by the increasing medical costs if they do not chip in more now,” she also cautioned.

For context, the government had set the statutory employee contribution rate at 9% for the whole of last year under Budget 2021 – lower than the original 11% that employees typically have to pay. This was in a bid to increase the take-home pay of EPF members, thereby providing them with some extra cash flow to ease financial hardships during the government’s fight against Covid-19. The reduced rate was then extended to mid-2022, and eventually restored back to 11% in July.

Rusmawati further shared some calculations to underscore her message; with the restored 11% contribution rate, an individual earning RM2,000 a month will be required to contribute RM220 instead of the lower RM180 when the rate was previously set at 9%. She also stressed that although she understood the value of the additional RM40 paid, especially for those who are currently struggling with the high cost of living, there is a need to look at the long term.

(Image: The Sun Daily)

Similarly, professor at Universiti Tun Abdul Razak, Barjoyai Bardai also applauded the EPF’s decision to restore the statutory employee contribution rate to 11%. He noted, however, that it is still the lowest rate when compared to Malaysia’s neighbouring countries.

The economist also reiterated the importance of EPF contributions, despite the availability of other saving schemes provided by the government. Additionally, he urged employees to refrain from regarding the amount deducted for such contributions as a loss, as they will eventually be able to access them again – with interest.

“EPF isn’t a tax but a long-term saving scheme,” Barjoyai emphasised, adding that this return to the 11% contribution rate can limit disruptions to retirement plans.

(Source: Free Malaysia Today)

0 0 votes
Article Rating


Comments (0)

Notify of

Inline Feedbacks
View all comments
Top Personal Finance News Articles
Post Image
Petrol Price Malaysia Live Updates (RON95, RON97 & Diesel)
The RinggitPlus Team
- 10th August 2022
We provide weekly updates on every Friday at 5pm on the prices of RON95, RON97 and Diesel in Malaysia and a chart that shows the movement of fuel prices across a 6-week period. Bookmark this page now!
Post Image
Astro 4K Ultra HD Broadcast To Be Available For Subscription By The End of This Year
Brian Chung
- 14th August 2018
By the end of 2018, Astro customers will be able to watch football matches in Ultra HD. Read on to know more about the 4k Ultra HD service.
Post Image
Touch n Go RFID: What Malaysian Road Users Need To Know
Jacie Tan
- 10th August 2018
Everyone’s talking about Touch ’n Go RFID being used at Malaysian highway tolls soon – here’s what you need to know about it.
Post Image
Best High Interest Savings Accounts In Malaysia (May 2022)
Pang Tun Yau
- 31st May 2022
Make your money work for you by depositing them into the best high-interest savings accounts in Malaysia!

Related articles

Related Posts Image
Related Posts Image
Related Posts Image
Related Posts Image